Asian FX gains on optimism over China reopening, smaller Fed hikes
Thailand’s baht and South Korea’s won were the top gainers
in Asia on Monday, as emerging currencies got a boost from
rising hopes of smaller rate hikes from the U.S. Federal Reserve
and the reopening of top trading partner China’s borders.
The baht and Thai stocks rose as much as
1%, both touching their highest levels since April 2022. The
currency has gained 3.4% since the start of 2023, making it the
top performer in the region.
“Given tourist receipts from China in Thailand accounted for
more than 3% of Thailand’s GDP in 2019, highest in Southeast
Asia, we expect Thailand to be the main beneficiary of China’s
reopening,” analysts at OCBC wrote in a note.
China braced for a “new phase” in its battle against COVID
after Beijing dropped pandemic border controls, dismantling a
final pillar of a zero-COVID policy and allowing a surge in
traffic across the nation.
The yuan jumped to a near five-month high against
Weakness in the U.S. dollar also boosted investor
sentiment after data on Friday showed wage growth slowed in
December, while services industry activity contracted for the
first time in more than 2-1/2 years.
Investors will now focus on the U.S. consumer price index
(CPI) data, due on Thursday.
“If the CPI numbers come in below expectations again, we can
expect to see a continuation of this risk rally as the markets
will have greater confidence that we are getting closer towards
the end of the Fed tightening cycle,” said Khoon Goh, head of
Asia research at ANZ.
Across the region, currencies strengthened, with the South
Korean won gaining over 2% to hit a peak since early
Both Malaysia’s ringgit and the Philippines’ peso
strengthened by 0.7%.
Major regional stock indexes were also higher. Equities in
Manila and New Delhi rose as much as 1.5% and
Elsewhere, analysts warned of more volatility in Brazil’s
financial markets following the arrest of supporters of
far-right former President Jair Bolsonaro after they invaded the
country’s Congress, presidential palace and Supreme Court.
The Brazilian real, among the top-performing emerging
currencies in 2022, had yet to trade on Monday.
“I don’t expect there to be any flowing effect in
emerging Asian currencies from it (the situation in Brazil), but
it does put Asia in a better relative position among emerging
assets,” Goh added.
** Alibaba jumped 7% after announcements that Ant
founder Jack Ma is giving up control of the fintech giant
following an overhaul
internet stocks rose
after Guo Shuqing, Communist Party secretary of the
People’s Bank of China, told state media that China’s clampdown
on the internet sector is coming to an end
** Top gainers on Thailand’s SETI include AQ Estate
PCL and ICC International PCL
Asia stock indexes and currencies
at 0652 GMT
COUNTRY FX RIC FX FX INDE STOCKS STOCKS
DAILY % YTD % X DAILY YTD %
Japan +0.17 -0.55 <.n2>
India +0.42 +0.42 <.ns ei>
Indonesi +0.35 -0.07 <.jk a se>
Malaysia +0.69 +0.66 <.kl se>
Philippi +0.67 +0.96 <.ps nes i>
Singapor +0.23 +0.62 <.st e i>
Taiwan +0.53 +0.57 <.tw ii>
Thailand +0.96 +3.36 <.se ti>
(Reporting by Himanshi Akhand in Bengaluru; Editing by Eileen
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